Wal-Mart & world today
The growth and dominance of Wal-Mart over the years has indeed turned it into an economy all its own. There is no single corporation in the world that has as much impact as Wal-Mart has, save perhaps for oil corporations, on any single domestic or even international economy (Hicks 27). The volume of sales which Wal-Mart generates is enough to keep the rest of the world happily employed and is also enough to keep the consumerist population of the United States happy in their spending habits (Hicks 27).
Every single commodity manufacturer who is interested in surviving must be able to gain the good graces of Wal-Mart. The impact of Wal-Mart is such that it “has life-or-death decision over [almost] all the consumer goods industries that exist in the United States (Gereffi 2006). ” This brief discourse will attempt to shed more light on the corporate behemoth Wal-Mart in an effort to highlight the keys to its success, showing how a small business idea became one of the largest non-government economic forces in the world today.
This will include a discussion on the business principles that have been applied as well as the microeconomic theories that are in play. Humble Beginnings: The book entitled, “Made in America,” by Sam Walton illustrates the unprecedented success that one entrepreneur had in expanding a five and dime store into one of the largest market forces in the world. When referring to the success of Sam Walton, the words that usually come to mind are spectacular and mind-blowing.
There is no doubt that Sam Walton has not only changed the way consumerism is viewed but also the way that business is conducted. Yet, in order to arrive at a better understanding of the success of Wal-Mart and Sam Walton, it is important to look at the model of Wal-Mart and how it has managed to influence the business world on a global scale. As mentioned in the book, one of the key concepts that Sam Walton has employed is the “Buy it Low, Stack it High and Sell it Cheap (42).
” This is one key concept that has remained in the consciousness of most major businesses today. While there are certain sectors that try to seek quality, the diversity that Wal-Mart offers has allowed Sam Walton to find a niche with over 90% of the purchasing public. This has in turn made Wal-Mart the global phenomenon that it is today. One thing that most businesses can learn from Sam Walton is the boost that his store provides by improving the productivity and efficiency of the domestic retail sector.
This effect has been shown in a study conducted by Global Insight that while Wal-Mart has been the cause for the drop in nominal wages, with wage rates dropping by nearly 2. 2 percent in 2004, it has also contributed to an overall reduction in consumer prices over the same time period, with a 3. 1 percent decline in consumer prices. This in effect translates to an increased level of disposable income for the consumers of 0. 9 percent. In dollars and cents, this 0.
9 percent increase in disposable income translates into nearly US$ 263 billion in added spending dollars or nearly US$ 895 per person. The success of Wal-Mart and the business genius of Sam Walton are based on the basics. As elucidated in the book, success is based upon keeping the ideas simple. There are no complex ideas that are introduced and no secret short cut formulas that are used. It was simply hard work and a keen understanding of what makes the consumers happy. At the end of the day, what really matters is if one can keep the buyer coming back to purchase more items or not.